Sen. Jeff Sessions (R-Ala.) got the ball rolling early, but Sen. Chuck Grassley (R-Iowa) picked it up and ran with it. I’m speaking, of course, of marshaling the voluminous evidence of Jack Lew’s unfitness for secretary of Treasury.
Grassley has been digging into Lew’s tenure at New York University, where he pulled down an enormous salary, including sweetheart loans, while the students were footing enormous tuition bills. Worse, under his nose NYU negotiated a deal with Citicorp (miraculously, Lew’s next employer!) to provide loans to students, a deal that then-state Attorney General Andrew Cuomo found to be illegal.
As the Wall Street Journal editorial board put it:
The Grassley inquiry is unlikely to derail Mr. Lew’s nomination, because Senate Democrats, the White House and most of the media really don’t care. But Mr. Grassley is doing a public service in revealing how liberals redistribute income to themselves. And Mr. Lew is finally delivering educational value to youngsters by providing a lesson for the Obama era: If you want the big bucks, go into the world of taxpayer-backed enterprises.
That was only the beginning of Lew’s remarkable good fortune. At Citicorp, Lew was paid gobs of money for doing goodness knows what, certainly not for doing a good job. The Post reports, “In early 2008, he became a top executive in the Citigroup unit that housed many of the bank’s riskiest operations, including its hedge funds and private equity investments. Massive losses in that unit helped drive Citigroup into the arms of the federal government, which bailed out the bank with $45 billion in taxpayer money that year.” But once again Lew failed upward:
Things continued to deteriorate the rest of the year. More than 50,000 employees, or one-seventh of Citigroup’s global workforce, were laid off in November. That year, the stock price dropped about 75 percent. Lew, meanwhile, was paid at least $1.1 million in 2008, according to financial disclosure statements.
By the end of December 2008, Lew had lined up a new job: away from Wall Street and back in Washington as a deputy secretary of state under Secretary Hillary Rodham Clinton.
Meanwhile, Citigroup’s alternative investments unit had become such a stain on the bank’s record that it was relaunched three years ago with a new name. It’s now known as Citi Capital Advisors.
And what’s more, he was given what Jonathan Weil at Bloomberg calls a “bounty” for getting himself into a high government post:
Lew’s employment agreement with Citigroup said his “guaranteed incentive and retention award” wouldn’t be paid if he quit his job, with limited exceptions. One was if he left Citigroup “as a result of your acceptance of a full-time high level position with the United States government or regulatory body.” This applied if he left “prior to the payment of any incentive and retention award for performance year 2008 or thereafter.” Such an award wasn’t guaranteed but would be consistent with the company’s practice, the document said.
A similar provision concerned his stock-based compensation. If Lew left in 2008 or afterward to accept a high-level U.S. government position, all of his outstanding equity awards, including restricted stock, would vest immediately, the document said. Alternatively, Citigroup had the option of paying Lew the cash equivalent of any shares he forfeited upon leaving. The terms didn’t mention other kinds of public-service work, such as a midlevel U.S. government job, a position in municipal or state government, or working at a nonprofit organization such as a university.
At a time financial institutions were being pilloried for giving executives extraordinary bonuses and perks, Lew was at the head of the trough.
This is precisely the grotesque crony capitalism Republicans have been railing against during the Obama era. Lew made an art form of profiting at the expense of the little guy and, specifically, the American taxpayer. If he were a Republican, he would not get within a mile of a confirmable post. Perhaps he won’t this time if Democrats are as repulsed by his record as Republicans have been.
For helping to uncover Lew’s unseemly past, most especially his dealings at NYU, Grassley deserves thanks. Well, done, Senator.